Estrela, traded on B3 under the tickers ESTR3 and ESTR4, is one of the most traditional companies in the toy sector in Brazil. It originated in 1937 as a small factory making rag dolls and wooden toy cars. Over its history, it has followed the country’s industrial evolution, automated processes, and started producing toys in plastic, metal, and other materials. Since its first doll, the company has produced more than 25,000 different types of toys, totaling over 1.2 billion units distributed throughout Brazil. The company was one of the first in the country to go public, in 1944, when it became a joint-stock corporation, which underscores its long-standing relationship with the capital markets and investors.

Historically, Estrela has built its relevance in the market through innovation and the creation of memorable products for generations of consumers. In the 1940s, it launched the dog Mimoso, the first wooden toy with movement and sound manufactured in the country, followed by classic games such as Pega Varetas and Banco Imobiliário. In the following decades, the company expanded its portfolio with vinyl dolls and animals, mechanical dolls such as Gui Gui and Beijoca, as well as the fashion doll Susi, which became a reference in Brazilian children’s imagination. Products such as Amiguinha, Autorama, and Ferrorama consolidated the company in several toy niches, including dolls, board games, electric toys, and collectibles, forming a portfolio recognized by different generations.

Estrela’s business model is centered on the production and import of toys, with a primary focus on the domestic market. The company’s work starts with identifying the needs and interests of children and teenagers in order to develop a collection of products focused on entertainment and motor, cognitive, and social development. The company maintains a team of around 25 professionals from various specialties dedicated to creating and developing new products. In addition to in-house development, it also sells toys designed by international companies as a strategy to complement its product line. Estrela also sponsors a national toy inventors’ contest, committing to launch the winning idea on the market, which reinforces its pursuit of innovation and Brazilian design.

From a revenue-segment standpoint, the games line is the company’s main economic pillar, accounting for approximately 64% of net revenue in 2024, a proportion that had already remained above 58% since 2021. Dolls make up the second-largest segment, with about 18% of revenue in 2024, followed by other groups such as modeling clay (Super Massa), preschool toys, activity toys, plush toys, radio-controlled toys, and other smaller categories. In terms of profitability by segment, games make a very significant contribution to net income, often above 80% of consolidated results in some years, while dolls have shown a negative contribution in certain periods, reflecting margin and competitiveness differences between product lines.

In its industrial and logistics operations, Estrela combines in-house production in Brazil with imports from countries such as China, especially for products with higher electronic content. Dolls are mostly produced in Brazil via a rotational molding process, with in-house differentiators such as the ability to manufacture eyes and hair, which is highlighted as a unique capability among domestic companies. Board games rely on card printing and plastic injection and are “practically only produced in Brazil.” Preschool and activity toys are largely imported, with strict quality inspection by the company, while radio-controlled and self-propelled toys are basically imported, given Brazil’s lower competitiveness in toys with high embedded electronics. The company also uses the “other” category for promotional giveaways for major brands, a strategy used to reduce idle production capacity during low seasonality.

The corporate structure includes industrial plants in Itapira, in the state of São Paulo, and in Três Pontas, in Minas Gerais, as well as a head office in São Paulo that houses the Presidency, Marketing, Ecommerce, Sales, New Business, and CEAC (Centro Estrela de Atendimento ao Consumidor – Estrela Consumer Service Center). Brinquemolde Ltda, a subsidiary controlled by Estrela Distribuidora de Brinquedos, is responsible for production in Três Pontas and supplies on a made-to-order basis to Manufatura de Brinquedos Estrela, which performs the finishing of the products. Estrela Distribuidora, in turn, is responsible for distribution to customers throughout the country, with billing centralized at the Itapira distribution center. Logistics relies on distribution centers in Itapira and Três Pontas, from which products are shipped by contracted carriers across Brazil.

On the commercial front, Estrela works extensively with major retailers and marketplaces, as well as specialty toy chains. In 2024, three customers accounted for significant shares of sales revenue: Lojas Americanas, with 12.2% of revenue; Amazon, with 9.6%; and Ri Happy, with 8.6%. These chains provide nationwide reach and both physical and online channels, enabling broad distribution of the company’s products. Estrela also makes intensive use of licensed characters from major international studios such as Disney, Warner, and Marvel, and from domestic brands such as Turma da Mônica and Patati Patata, as well as partnerships with TV networks such as SBT, Record, and RedeTV for products tied to television programming. Contemporary licenses such as Masha and the Bear, Peppa Pig, Zak Storm, Hotel Transylvania 3, Marvel, and soap operas, as well as partnerships with YouTubers and variety shows, are part of the strategy to keep the portfolio aligned with current entertainment culture.

The company has been seeking to diversify its scope beyond traditional toys, with initiatives such as Estrela Cultural and Estrela Beauty. Estrela Cultural was created as a wholly owned subsidiary dedicated to activity-based children’s books, geared primarily toward sales to governments in municipal, state, and federal bids, with a focus on Brazilian authors and illustrators and on encouraging reading. Estrela Beauty is a children’s makeup line, certified by Anvisa, developed with the proposal of allowing children to play with colors without being tied to rigid beauty standards. This line is sold through its own stores in the city of São Paulo, in Campinas, and through franchises in Brasília, Curitiba, and São José do Rio Preto, via the company Catu, which develops and sells children’s cosmetics.

From a regulatory, environmental, and quality standpoint, Estrela operates in a sector with strict technical requirements. Toys in Brazil must have compulsory certification by Inmetro, in accordance with the NM-300 standard and specific regulations, and the company’s suppliers must comply with these requirements. The company maintains its own Inmetro-accredited laboratory capable of performing safety and quality tests, which also provides services to other companies in the sector. Its industrial units have operating environmental licenses and are managed under an ISO 9001 quality system. Although the company does not publish a sustainability report and states that it does not have a formal social-environmental responsibility policy, it claims to follow environmental protection rules and to maintain in its product line games that encourage environmental awareness among children and teenagers. The business is highly seasonal, with a strong concentration of sales in the fourth quarter due to Children’s Day and Christmas, which poses cash management challenges that are relevant for those tracking ESTR3 and ESTR4 shares on B3.